Новак — про снижение добычи нефти, поставки на Восток и дисконт к Brent

Novak - about the decline in oil production, supplies to the East and the discount to Brentagainst the backdrop of sanctions and a decrease in the discount to Brent.RBC collected key statements

About the decline in oil production in RUSSIA

Oil production in Russia in 2023 will decrease by 20 million tons, to 515 million tons, Deputy Prime Minister Alexander Novak told reporters after a meeting of the Board of Trustees of the Moscow Energy Institute. “The total production (together with gas condensate), which we predict, is 515 million tons. Compared to last year, we had 535 [million tons], that is, minus 20 million tons,” he said.

Novak said on Feb. 10 that Russia had decided to temporarily and "voluntarily" cut oil production by 500,000 barrels from March. per day (approximately 5%) in order to "contribute to the restoration of market relations." This happened after the EU embargo on the import of Russian oil came into effect on December 5, 2022, and on the import of petroleum products from February 5, 2023. Since that time, price ceilings have been set for the supply of oil and oil products from Russia to third countries that did not join the sanctions: for oil - $60 per barrel, for light oil products - $100, for dark ones - $45 per barrel. In early April, the Russian authoritiesextended this production limit until the end of 2023. On a voluntary reduction in oil production by 500 thousand barrels. per day also announced Saudi Arabia and several other members of OPEC.

Novak said that in April Russia reduced production to the level it had promised - 500,000 barrels. per day compared to February. According to OPEC, in February Russia produced 10 million barrels. oil per day (without condensate). For two months of 2023, the production of oil with condensate in Russia decreased by 0.6% (compared to the same period last year), to 88.1 million tons, Rosstat reported . In March, the agency stopped publishing data on oil production.

Now, according to the Deputy Prime Minister, the oil market is balanced and so far there is no need for new production cuts. “My opinion is that the market is now balanced, taking into account earlier decisions, taking into account our reduction, the reductions that we have seen in other countries. Plus, the winter period [was], now consumption will start to grow, let's see how the situation will develop," he said.

On the redirection of supplies from the West to the East

“Those energy resources that were previously directed to Europe have been largely redirected to new markets. If we talk about oil, then we probably redirected about 20% of the volumes that were previously supplied to Europe to the markets of India, CHINA , and other countries,” Novak said on Wednesday, April 26, speaking at the educational marathon “Knowledge. First." Later, he clarified that it was about redirecting the EXPORT of oil and oil products in 2022.

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“I said in 2022 that 20%, about 40 million tons of our total export of oil and oil products, which was in the western direction, and we had about 220 million tons in the western direction, 40 million tons went to the East,” explained the Deputy Prime Minister. “This year, 140 million tons of oil and oil products will go to the East. And in total there will be about 80–90 million tons in the western direction,” he continued. Thus, in 2023, the Russian authorities expect to redirect almost 65% of oil and oil products supplies from Europe to Asia, while supplies to the EU will drop by 2.5 times.

According to the CDU of the Fuel and Energy Complex, in 2021 Russia exported about 230 million tons of oil, of which 191 million tons were exported via oil pipelines, Interfax recalls. Of the maritime transport, 35 million tons accounted for the Far Eastern port of Kozmino. The export of oil products in 2021 amounted to 144 million tons. Earlier, Novak said that in 2022, oil exports from Russia increased by 7.6% to 242 million tons.

Despite the European embargo on the import of Russian oil and oil products, there are several exceptions: supplies through the Druzhba pipeline can continue, Bulgaria can buyoil for the LUKOIL refinery, which receives it by sea, and Croatia - vacuum gas oil. Deliveries through the Druzhba went along two branches - northern and southern: Poland and Germany received oil along the northern branch (they abandoned Russian oil), and the Czech Republic, Slovakia and Hungary received oil along the southern branch.

On the reduction of Urals discount to Brent

The discount in the price of Russian oil to the reference grade Brent, which after the introduction of the European embargo reached, according to Argus, $ 35-40 per barrel, is decreasing, Novak told reporters. In February, the government submitted amendments to the Tax Code to the State Duma, providing for a smooth reduction of this discount for the purposes of taxing oil companies: from $34 per barrel in April, it will have to be reduced by $3 every month until it reaches $25 per barrel in July.

“Now the discount is actually lower than the minimum, which is established by law. Therefore, on the contrary, more is taken than the bar that is set in the law. Now the discount for North Sea oil [Brent] in the Baltic is $26–27 per barrel, while the legal discount is $34 per barrel in April <...>, that is, the taxable base is higher,” the Deputy Prime Minister says.

Taxation has so far been tied to the European market, and Russian oil now also goes to other regions, where discounts are lower than in the Baltic, "but taxes have always been taken that way."

About reducing oil refining

In 2022, oil refining in Russia decreased by 3%, to 272 million tons. According to Rosstat, last week, Russian companies reduced the volume of diesel fuel production by 4.4%, to 1.678 million tons, while gasoline production decreased by 3.7 %, up to 808 thousand tons. Diesel fuel is one of the main oil products that Russia supplied to the EU before the imposition of sanctions, and gasoline is mainly consumed domestically.

The decline in oil refining in Russia is due to refinery repairs, the domestic market is provided in full, Novak said: “We have some plants for repairs, maybe for this reason a slight decrease in refining production. But, in general, this does not affect the provision of the domestic market in any way, we have enough oil products,” he said.